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Growth & Challenge for Smaller Installers

Don Loweburg

©2006 Don Loweburg

Now more than a year old, the silicon shortage continues to inflate the costs and reduce the availability of solar-electric (photovoltaic; PV) modules. As a consequence of the limited module supply, a spot market has evolved, where modules can be purchased—but only at a premium.

The situation boils down to capital availability— installation companies with sufficient capital generally experience no shortage of modules, while smaller companies struggle to get their hands on PV products. Of course, this is

not an unexpected development. Numerous consolidations at the manufacturing and distribution levels of the PV business have occurred during the last few years. And, as the market for PV installations has grown in the United States, particularly in states with incentive programs like California, New Jersey, New York, and Arizona, some installing companies are growing rapidly. Several companies are developing a national presence, with multiple sales offices in those states that show lots of PV promise.

While solar investment is booming and creating a supply of capital, well-heeled companies are having an ever-growing influence on the business of installing solar-electric systems, possibly to the detriment of smaller businesses, which tend to be module-poor.

International Influence

Just as the PV module shortage is shaping the domestic installation business, so is it dramatically shaping the international scene. Recent developments by two German companies will also certainly offer both opportunities and challenges for PV installers in the United States.

Conergy AG, headquartered in Hamburg, Germany, has been buying small and midsized renewable energy companies all over the world and has more than 1,200 employees. Although Conergy acts as a conventional distributor, serving a network of installing companies, their most recent unveiling was SunTechnics, an installation subsidiary in Sacramento, California, that has put them into a primo position to compete for West Coast PV installations. Conergy's SunTechnics has two offices in the United States, and ten others worldwide.

Just this year, SolarWorld AG, based in Bonn, Germany, surprised many in the PV industry when it purchased Shell Solar's entire monocrystalline operations. As a vertically integrated company, SolarWorld manufactures and sells silicon wafers, silicon cells, modules, and complete PV systems—and also provides installation services—making profit from every level of the PV business chain. Like Conergy, this well-financed company has a global perspective, with about 1,000 employees worldwide. SolarWorld's CEO Frank Asbeck says that with the Shell Solar buyout, SolarWorld AG is poised to become "the biggest producer of solar power technology in the United States."

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These changes and other marketing strategies, such as the sale of PV systems through national chains like The Home Depot, represent a growing trend towards corporate involvement in all phases of the PV business, including the marketing and installation of PV systems.

The Shortage & Small-Scale Success

Although some experts predict that the silicon shortage will ease next year, others note that given the global growth of PV, the supply may still fall short of demand. Major new incentive programs are being implemented in Italy and Spain. Forecasts also show strong growth in the U.S., German, and Japanese markets.

Given the increasing demand for PV, ample possibility exists that the module shortage, as experienced by independent PV system installers, may persist indefinitely. Which begs the question: Can smaller companies prosper in this module-constrained market?

To compete with the corporations, smaller companies need to purchase modules in large quantities. To do so, some are expanding their operations by acquiring financial capital. But this is prohibitive and unrealistic for most small businesses. There is, however, another kind of capital wholly within the means of smaller companies.

That's human capital. Building superior customer service, seeking special training, and obtaining professional certification are all examples of investments in human capital. Small companies can also excel by offering personalized service. In fact, many customers say they prefer to work with companies in which the owner is actively engaged with them and intimately knowledgeable about their project.

So, smaller solar business should take heart—the global solar and renewable energy boom is bound to offer challenges and opportunities for companies of all sizes. Larger companies will be hiring, both in the manufacturing and service areas. And smaller companies can diversify by offering specialized services, such as load audits, energy efficiency advice, and energy management, in addition to installing systems.

As the old saying goes, "A rising tide raises all boats." Thankfully, where solar technology is concerned, there's room on the sea for both large ships and small.

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Don Loweburg, IPP, PO Box 231, North Fork, CA 93643 • 559-877-7080 • [email protected]www.i2p.org

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Getting Started With Solar

Getting Started With Solar

Do we really want the one thing that gives us its resources unconditionally to suffer even more than it is suffering now? Nature, is a part of our being from the earliest human days. We respect Nature and it gives us its bounty, but in the recent past greedy money hungry corporations have made us all so destructive, so wasteful.

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